TaxTMI 
TaxTMI 
2018 (5) TMI 2116
X X X X Extracts X X X X
X X X X Extracts X X X X
.... page 3 where he has narrated various payments made during the year along with actual date of payment and due date of payment. Learned A. R. stated that Hon'ble Allahabad High Court in the case of Sagun Foundry (P.) Ltd. vs. CIT [2017] 78 Taxmann.com 47 (Alld) has held that if the assessee deposited contribution of employer and employee towards provident fund beyond due date prescribed under relevant act but before due date of filing of return of income u/s 139(1), the assessee was entitled to deduction u/s 43B and 36(1)(via) of the Act. 4. Learned D. R., on the other hand, heavily relied on the orders of the authorities below. 5. We have heard the rival parties and have gone through the material placed on record. We find that the assessee is a private limited company and is engaged in the business of manufacturing and export of leather and leather footwear. During assessment proceedings the Assessing Officer, from the perusal of the tax audit report, observed that the assessee had deposited an amount of Rs. 2,73,172/- towards employee's contribution towards provident fund which were deposited after due date and therefore, the Assessing Officer disallowed the expenditure u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how matter came before High Court in appeal. Court considered following question, posed in para 7.01, reads as under:- "Short question which is posed for consideration of this court is with respect to the disallowance of the amount being the employees' contribution to the PF account/ESI contribution which admittedly which the concerned assessee did not deposit with the PF Department7ESI Department within due date under the PF Act and7or the ESI Act." 18. Gujrat High Court referred to Section 2(24)(x) and found that any sum received by Assessee (employer) from his employees as contributions to any provident fund or superannuation fund or any fund set up under Act, 1948, or any other fund for welfare of such employees, constitute income. However, Section 36 of Act 1961 provides for deduction in computing income referred to in Section 28. The relevant provision of Section 36 applicable to the case before Gujarat High Court was Section 36(1)(va) with which we are also concerned. It ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd [20141 366 ITR 163/12013] 217 Taxman 64 (Mag.V35 taxmann.com 616, Punjab & Haryana High Court in CIT\. Hernia Embroidery Mills (P.) Ltd [20141 366 ITR 167/[20131217 Taxman 207/37 taxmann.com 160, Himachal Pradesh High Court in CIT v. Nipso Ployfabriks Ltd. [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com 90 and Karnataka High Court in CIT v. Sabri Enterprises [2008] 298 ITR 141. 21. Karnataka High Court had an occasion to consider, whether it should dissent with the view taken in the earlier judgments and follow the view taken by Gujrat High Court in Gujarat State Road Transport Corpn. (supra) and this occasion came in Essae Teraoka (P.) Ltd. v. Dy. CIT 120141 366 ITR 408/222 Taxman 170/43 taxmann.com 33. Dispute relates to A.Y. 2008-09. Assessee filed Return on 26.09.2008. Return was processed under Section 143(1) and thereafter on scrutiny, notice under Section 143(2) was issued. Assessing Officer completed assessment by order dated 24.12.2010 under Section 143(3) disallowing Rs. 12,51,737/- under Section 36(l)(va) and also disallowing Rs. 1,04,621/- under Section 14A read with Rule 8D. In appeal, CIT (A) reversed findings of Assessing Officer but on appeal preferred by Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernia Embroidery Mills (P.) Ltd. (supra) not only followed Alom Extrusions Ltd. (supra) but also its own earlier judgment in CIT v. Rai Agro Industries Ltd. [2011] 334 ITR 122/[2012] 20 taxmann.com 194/207 Taxman 10 (Mag.), to hold that Section 43B shall apply to both 'contributions' i.e. employers' and employees'. 24. Kerala High Court in recent judgment in CITv. Merchem Ltd. [2015] 378 ITR 443/235 Taxman 291/61 taxmann.com 119, has followed the decision of Gujarat High Court in Gujarat State Road Transport Corporation (supra) and dissented with the otherwise judgments of Rajasthan High Court in C/rv. State Bank ofBikaner and Jaipur [2014] 363 ITR 70/43 taxmann.com 411/225 Taxman 6 (Mag.) Karnataka High Court in Spectrum Consultants India (P.) Ltd. (supra) and Bombay High Court in CITv. Ghatge Patil Transports Ltd. [2014] 368 ITR 749/[2015] 228 Taxman 340/53 taxmann.com 141. 25. Before following a particular view when there is divergence in views of different High Courts, we find it appropriate to examine Supreme Court judgment in Alom Extrusions Ltd. (supra) to find out whether it can be confined only in respect to employers' contribution or is applicable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s with a non obstante clause. The underlying object being to disallow deductions claimed merely by making a book entry based on the mercantile system of accounting. At the same time, Section 43B made it mandatory for the Department to grant deduction in computing income under Section 28 in the year in which tax, duty, cess etc. is actually paid. Parliament took cognizance of the fact that accounting year of a company did not always tally with the due dates under Provident Fund Act, Municipal Corporation Act (Octroi) and other Tax laws. Therefore, by way of First Proviso, an incentive/relaxation was sought to be given in respect of tax, duty, cess or fee by explicitly stating that if such tax duty cess or fee is paid before the date of filing of the return under Act 1961, Assessee would than be entitled to deduction. This relaxation/incentive was restricted only to tax, duty, cess and fee. It did not apply to contributions to labour welfare funds. The reason appears to be that the employer should not sit on the collected contributions and deprive workmen of the rightful benefits under social welfare legislations by delaying payment of contributions to the welfare funds. But when imp....